Ed Luce in the Financial Times worries about the shift of R&D in American (or American-founded) companies to China, and hopes that the departure of Larry Summers will occasion a rethinking of neoliberal trade policies.
Take Applied Materials, a big US manufacturing company, which earlier this year shifted its chief technology officer and research and development operations to China. The company said it needed its R&D to be close to the source of its manufacturing operations and to its biggest future market. This is the opposite of what is supposed to happen. America was meant to keep the high-end jobs at home, while China would get all the low-value added production.
When I was at IFTF I wrote about the gravitational pull of manufacturing, and argued that it's actually very hard to disaggregate R&D and product development (the high-end creative stuff that we were supposed to keep here in California) from manufacturing (which could be done by teenage girls and brown people in– well, who gives a damn where it's done). This is true for several reasons. Historically, some of the biggest innovations have emerged in the course of working on production problems (Bill Leslie's work explicates this relationship nicely). As designers know, creating something that can be mass-produced is not a trivial intellectual exercise: there's a special kind of genius necessary to make prototype (like the computer mouse, say) and turn it into a product. Manufacturing high-tech objects can be pretty damn hard, and requires more tacit knowledge and skill than we usually realize (Intel's Copy Exactly program is a great example of a company's attempt to get its hands around this fact). Finally, if a company has to choose between having imaginative research and getting products out the door, it's going to subordinate the former to the latter.
Not everyone sees this as a bad thing. Matthew Yglesias, for example, argues that
the alleged need for R&D to be proximate to manufacturing options (plausible) cuts in both directions. Conventional wisdom is that manufacturing operations will all drift to low-wage countries. But if the USA is a better location for R&D than China, and if it’s strongly desirable to co-locate R&D and manufacturing operations, then many firms will want to retain manufacturing operations in the United States of America. So if this story is right, then more and better education for America is the key to retaining high-wage manufacturing jobs.
I think this is wrong for two reasons. First, it's a lot harder to move the infrastructure for manufacturing than it is to move R&D, and it's very hard to get a factory back (or just as important, the skill necessary to manufacture things) once you've lost it. It's much easier to have production engineers fly to Taiwan or Shanghai every 6 weeks (though it sucks for those people). Second, it raises the question of why manufacturing jobs have left the U.S. at all, if R&D can attract manufacturing?